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Whether
your community’s documents are relatively new or have been recorded for several
decades, this article is intended to provide a basis for determining why
amendments should be considered. Governing documents generally include the
Declaration (or Master Deed for condominiums created under the Horizontal
Property Act), Articles of Incorporation (for associations that are
incorporated), Bylaws, Rules and Regulations, Plats, and Plans. The governing
documents may also include Design or Architectural Guidelines. A Public
Offering Statement is not part of the governing documents. It is important to
consider which document(s) will be amended in order to determine the correct
process and procedure.

As
community association lawyers, we spend a large part of our time drafting
governing documents, reviewing governing documents, interpreting governing
documents and, in many cases, amending all or some provisions of those
documents. We can distill that experience into a handful of reasons that
documents should be amended. While it is a good idea to review governing
documents each year when the state laws change to determine what, if any,
effect the new laws have, this is more likely to be done by most associations
on a less frequent basis (like every 20-25 years), at transition from declarant
control, when recommended by counsel, or only when facing a particular
situation (or crisis) that requires an intensive look at the documents.

1. Delete Obsolete Provisions.

This
first set of reasons might be called clean up. It is a de-cluttering of
governing documents. Governing documents initially are drafted on behalf of the
declarant, or developer. After transition or the expiration of declarant
rights, it is appropriate to delete provisions related to expansion,
contraction and other declarant rights. These provisions tend to take up
several pages throughout the Declaration and Bylaws. And, unlike other
provisions that can create confusion, they simply are no longer needed or
relevant.

In
this age of accelerations, advances in technology have changed many aspects of
common interest community life. Provisions relating to old technology should be
deleted or modernized through amendment. When satellite dishes were the size of
a small helicopter, it was appropriate to prohibit them in associations – they
were huge and obtrusive. Not only has technology changed such that many are
less than one meter or less in diameter, but federal law has preempted
restrictions on “covered antennas” making those provisions no longer
enforceable. Restrictions on some building products similarly have come a long
way, making some products more attractive and durable than products on the
market at the time documents were put to record. It may make sense to remove a
restriction against vinyl fences, for instance, as they may require less
maintenance and last longer. Virginia law further recognizes that notices,
voting, consents and other aspects of association governance can be aided by
technology. Documents should be amended to permit technology to aid the process
and increase participation.

Provisions
citing incorrect or repealed provisions in the Virginia code or other laws, or
the documents, should be deleted or updated. The Condominium Act superseded the
Horizontal Property Act. Terminology should be updated and provisions amended
to comply with the Condominium Act.

2. Remove Unenforceable Provisions.

Federal
law has trumped provisions in association documents in a few areas, including
satellite dishes. Provisions prohibiting all antennas and requiring advance
approval for antennas one meter in diameter or less in an owner’s exclusive use
area are no longer enforceable. Keeping such restrictions in governing
documents can be misleading and confusing. Boards may not know that such
provisions are unenforceable or the parameters on enforceability. Fair Housing
laws, federal and state, provide another example of laws that impact the
enforceability of provisions in governing documents. In some cases,
accommodations from provisions of the governing documents are required for
those with a disability. Modifications to property may also have to be
permitted for a similar reason. The governing documents should be reviewed to
determine if there are any “red flags” with regarding to “children” or other
fair housing implications.

Changes
in state law also have the effect of making provisions unenforceable. This is
more likely to result in rules being unenforceable. There are particular
subject matter rules that no longer are enforceable unless specific authority
exists in the recorded documents. Some examples include rules related to
rentals, transfer fees and solar panels.

3. Clarify Rights and Responsibilities.

Perhaps
the area that results in the need for legal opinions most often is the
responsibility for maintenance, repair and replacement. To determine who is
responsible, it is usually necessary to identify the particular components at
issue, many of which are not identified with particularity in the documents. Condominium
boundaries generally are identified by broad definitions. Sometimes the plans
depict more specificity. The Virginia Code also provides some clarification
when the documents do not otherwise provide.

It
is not always easy or apparent how a building component is classified, and that
leads to the need for a legal opinion. To assist in determining who is
responsible for the various building components, it is usually very helpful to
work with association counsel to develop a maintenance chart that identifies
building components, classifies them and sets forth who is responsible for
maintenance, repair and replacement. This provides a useful tool for owners,
the Board and management, and may save cost in the long run.

Once
a component has been identified, the documents generally set forth the various
responsibilities to maintain, repair, replace and insure. The responsibility to
maintain, repair, replace and insure do not have to be consistent with
classification or “ownership”. The responsibility for unit or lot components is
not always on the unit or lot owner. The documents may slice and dice those
responsibilities between the owner and the association. In a high rise, for
example, the repair and replacement responsibility for balconies (that may be
classified as part of the unit, limited common element or common element) may
rest with the Association, while the obligation to maintain the balconies (i.e.
keep clean and free from snow, ice, debris) may rest with the unit owner. Or,
maybe only the responsibility to replace the balcony railing rests with the
association. It would be difficult for an individual owner to contract and
coordinate a balcony repair ten stories off the ground, but not as difficult
for the Association.

In
some cases, it may be the desire of the Association to shift the obligation
from one party to the other. This would be a good reason to amend. If owners,
for instance, are responsible for all aspects of the balconies, but it is not
practical, then an amendment to shift that responsibility from the owners to
the Association may be the solution. Conversely, if it makes more sense for the
owners to repair a certain unit or limited common element component rather than
the Association, then an amendment may be the answer.

Similarly,
an association may decide that it is more appropriate for the insurance
requirements of certain components (generally unit components) should follow
the obligation to maintain, repair or replace. Therefore, an amendment to the
insurance provisions to, for example, to remove master policy coverage of
finished surfaces of units, may be in order. It could reduce claims, preserve
the ability to obtain insurance at favorable rates and align maintenance with
ownership. Alternatively, it may be more appropriate to amend to allocate
responsibility for the deductible under the master policy. The approval
requirement for an amendment to change maintenance, repair, replacement and
insurance obligations is less than changing classification and addresses the
issue.

4. Remove Obstacles to Governance.

Limits
on the amount of the annual assessment, high quorum requirements, proxy witness
requirements, certified mail requirements for most notices, restricted
borrowing authority, higher than required amendment requirements, inadequate
enforcement authority and lack of assessment collection remedies (late fees,
interest, acceleration, attorneys’ fees) are some of the more prevalent
obstacles Boards face to carrying out the business of an association and
accomplishing Association goals. Any or all of these may be prevent or delay a
Board from performing its duties that can decrease property values, hamper
progress and stymie decision making and governance.

Dollar
and percentage limits on the increase in the annual assessment are arbitrary,
tend to lose relevance over time and are not related to the actual needs of an
association.

With
apathy running rampant in many associations, high quorum requirements are an
impediment that is unnecessary. Many older documents have quorum requirements
of 25-50%, which is too high just to call a meeting of owners to order. The
Virginia statutes permit quorum as low at 10%. This does not affect the
requirement necessary to take action, but at least a meeting can be held.

The
requirement to have a proxy witnessed was removed from the Condominium Act over
a decade ago. Yet, many condominium instruments still require that proxies be
witnessed. This is one more hurdle that could invalidate a proxy and decrease
participation. Removing the requirement by amendment is one way to facilitate
the process and make it easier for owners to be part.

Certified
mail requirements can add expense, and do not insure that owners will receive a
notice or letter. Many owners are not home when mail is delivered and will not
take the time to pick it up later. Unless required by statute or other good
cause, consider removing this requirement and saving expense.

Documents
may contain an amendment requirement that is more onerous than is required by
statute. An amendment to lower the approval requirement (to statutory minimums)
or streamline the amendment process itself may be needed to make needed changes
and progress.

Not
having adequate enforcement remedies in the recorded documents can be a source
of frustration to associations trying to achieve their objectives. It can
result in increased cost for court action that may be impractical or not
justified under the circumstances, and hamstring a Board in its ability to seek
compliance. If documents do not provide the ability to suspend facilities or
services for non-payment or assess charges for violations (in accordance with
Virginia law) or utilize self-help (ability to correct violation if owner fails
or refuses), then consider an amendment to include these important tools.

Assessments
are the lifeblood of an association. Failure to pay results in a drain on the
association and the other owners have to make up the deficit. There is a cost
to non-payment. Not only is there the time value of money, but there is
administrative and legal cost and expense. The documents need to provide
adequate remedies in event of default so the association can be made as whole
as possible. With a provision making the owner responsible for attorneys’ fees,
for instance, an association can only recover such fees if it obtains a
judgment and prevails, and there is no guarantee a judge will award all fees
incurred. Post-judgment collection efforts, such as garnishment or debtors’
interrogatories are not considered as part of a court award, and there is no
opportunity to seek them after a judgment is final.

5. Address Particular Circumstances; Changes in Community.

Addressing
particular circumstances is more likely to result in amendment of one or a few
provisions of the governing documents rather than a wholesale review and
amendment and restatement. Examples include high rental occupancy rates,
short-term rentals, home-based businesses, smoking, pets and
zoning/proffer-related obligations.

It
is also important to note that as a community develops and evolves, the desires
and constituency of its membership may change and call for amendments. Perhaps
it was envisioned as a “retirement” community originally, but the demographics
have changed and young families or millenials inhabit a community, or vice
versa. Or, perhaps an office park was envisioned to encompass only certain
business, but as the community develops, additional uses are desired. This may
lead to the desire to add or delete restrictions to adapt to changed
uses.

6. Clarify Conflicting, Ambiguous or Complex Provisions.

Believe
it or not, many governing documents are put to record or created with
contradicting provisions. For instance, the Declaration may provide for a late
fee of a percent of the assessment, but the Bylaws have a specific dollar
figure. Or, perhaps a rule is enacted that has a figure that does not agree
with Declaration provision. While Virginia law provides rules on
complementarity, with the Declaration and Articles of Incorporation controlling
over the Bylaws and the Bylaws controlling over the rules (unless included as
an Exhibit to the Declaration), the more specific governing the general, etc.,
these inherent contradictions tend to create confusion or enforcement problems
that can be alleviated through amendment.

In
other cases, documents are ambiguous, and could be improved by clarifying
ambiguous or complex provisions that are difficult to read and understand. Older
documents frequently contain provisions in the Declaration or Bylaws and rules
that are duplicative, and in some cases conflicting. It is not necessary to
have the same provision in multiple documents, and it may simplify the
documents (and save some pages and trees), and reduce conflict and ambiguity to
remove the repetition.

7. Make Document User-Friendly.

This
category of change may not be reason alone to undergo the amendment process,
but if amendments are in play, it provides a good opportunity to clean up
existing documents and make them more user-friendly. Documents that are easy to
read and identify lead to great understanding and compliance.

When
amending, consider including a table of contents, headings and other
organizational tools. Consider changing font, letter size, adding charts and
tables, section numbers, indentation and offsets and other formatting tools
that can make documents easier to read. This is also a good opportunity to
correct typos and other errors, some of which may be amended by a corrective
amendment.

When
documents have been amended several times in piecemeal fashion, it can be
difficult to determine what the current provision is on a particular issue. It
also can lead to errors in record keeping, resale packets and decision-making
based on changes that get missed. If documents have been amended several times,
consider amending and restating into a single document that encompasses all
changes to date and alleviates the need to flip through several documents to
locate a provision. It can save time and expense and lead to a greater
understanding.

There are many
reasons to amend governing documents. It can facilitate the governance of an
association, save time and expense and further the goals of enhancing property
values, by leading to a greater understanding by owners, boards and management,
all of which increases compliance, reduces confusion and conflict and brings
more clarity. Amending documents is a technical process. It is an unauthorized
practice of law for a non-lawyer to prepare amendments that affect title to or
an interest in real estate. Consult your association attorney about amendments
that may be right for your community.

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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